Huyton SA v Distribuidora Internacional de Productos Agricolas SA de CV
| Jurisdiction | England & Wales |
| Judgment Date | 25 October 2002 |
| Neutral Citation | [2002] EWHC 2088 (Comm) |
| Docket Number | 1998 FolioNo: 1805 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 25 October 2002 |
[2002] EWHC 2088 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
The Honourable Mr Justice andrew Smith
1998 FolioNo: 1805
Mr D Johnson QC and Mr E Broadbent (instructed by Messrs Middleton Potts) for the Claimants
Mr T Young QC and Mr T Otty (instructed by Messrs Hill Taylor Dickinson) for the Defendant
Hearing dates : 21, 24, 28–31 January, 4–8, 11–13, 18–21, 25 February, 4–5, 7, 8, 12, 13, 21 March, 25 April, 22 July 2002
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Andrew Smith:
This case is about a shipment of Ethiopian sesame seeds sent to Mexico and about its storage in Mexico. I first say something about sesame seeds, particularly Ethiopian seeds, about importing agricultural products such as sesame seeds into Mexico and about warehousing in Mexico.
ETHIOPIAN SESAME SEEDS
Ethiopian sesame seed is grown in the north of the country around the border with Sudan. It is generally harvested in late October or November. It is then transported south to Addis Ababa where it is stored in warehouses, being cleaned as and when it is required for export. It is packed into jute bags.
In order to be exported by sea from Ethiopia, the seeds are carried by road from Addis Ababa to the port of Assab in Eritrea on the Red Sea. Generally sesame seeds are carried to Assab only when the lifting vessel is more or less ready to load. This is because Addis Ababa is at a high altitude, and therefore is better for storage over extended periods than Assab. Moreover, there are only limited storage facilities in Assab. The goods are carried to Assab by trucks, which typically carry some 20–30 mt of seeds.
The greater part of the world's production of sesame seeds is crushed for the production of oil (a process which also produces a residual paste), although significant quantities are eaten and used to produce tahina and halva. Seeds that are crushed are often (but not always) first peeled, or hulled, which increases the oil yield because the skins would absorb oil when the seeds are crushed.
Sesame seeds are oil seeds and contain free fatty acid ("ffa"). A low ffa content is a sign of freshness, and the lower the ffa content, the longer the life of the product from the seeds. High ffa content is an indication of rancid and ill-tasting seeds.
Oil seeds for crushing are generally traded with a warranty as to the oil content and the maximum ffa content. The expert evidence was that peeled or natural sesame seeds with an ffa content of more than 2% cannot be marketed in Europe or the USA. Mr Ian Bollard, the defendants' expert witness, said that this applies to "most (if not all) other consumption areas of the world". Mr Bollard also explained the difficulty of blending with superior seeds those with a high ffa content. The evidence of Mr K. Karamanoukian, the claimants' expert witness, was that sesame seeds with up to 3% of ffa might be sold in developing countries, particularly Egypt. It is safe to conclude that seeds with a higher ffa content than 2% would be difficult to sell for human consumption. If seeds are traded on the basis that they are fair average quality (or "FAQ"), this connotes that their ffa content is not more than 2%.
The age of the seeds can affect the ffa, in that there is a danger, not an inevitability, that it will increase in older seeds, and once ffa starts to increase, it does so rapidly. (The connection is relied upon by the defendants, who plead that the specification describing the goods as "ffa 2%" designated them as being new crop) Storage conditions are also important. In good conditions seeds from one season can be stored into the next. If stored in poor conditions (that is to say at high temperatures, in moist conditions or without being properly aired) there are dangers both of infestation from insects and bacteria and also of increased ffa.
IMPORTING AGRICULTURAL PRODUCTS INTO MEXICO
In accordance with article 23 of the Federal Law of Agricultural Health (or Ley Federal de Sanidad Vegetal) the importation into Mexico of products such as the sesame seeds in this case is controlled by the Mexican Agricultural Authorities, who grant phytosanitary certificates to permit importation. Article 24 of that law (together with subsidiary legislation) provides that in the circumstances of this case the importation of the goods must satisfy the phytosanitary authorities of the port or place of entry that the goods comply with the "Norm" (a form of subsidiary legislation) numbered NOM-006-FITO- 1995 and dated 26 February 1996.
A person seeking to import an agricultural product must make a written request to the Ministry of Agriculture ("Sagar") for permission to do so Within prescribed periods (ten days where the phytosanitary requirements are known to Sagar and 120 days where they have to be researched), Sagar have to approve or refuse the application to import, and if the application is approved, Sagar will set out the phytosanitary requirements that must be met by the importer.
As I shall describe, the defendants, Distribuidora Internacional de Productos Agricolas SA de CV ("Dipasa"), filed an application with Sagar for the importation of the sesame seeds on 8 June 1998. Sagar required that the importer, Dipasa, keep the goods under quarantine until processed and that a sample should be taken and analysed in an approved laboratory.
Once the specified phytosanitary requirements have been satisfied, Sagar issue a phytosanitary certificate of importation, which is to be presented to the customs authorities in order to obtain customs clearance for importation. In this case, Dipasa obtained a phytosanitary certificate of importation on 9 June 1998.
Upon receiving the phytosanitary certificate of importation, the importer, or his customs broker, prepares an import application, or "pedimento", to the customs authorities at the port or place of importation. Article 36 of the Customs Law (Ley Aduanera) stipulates the documents that are to be presented to the authorities with the pedimento. They include the applicable bill of lading or airway bill validated by the carrier or his agent, a certificate of origin, a commercial invoice and a document that evidences compliance with any regulation imposed by the Mexican authorities for the importation of the product, that is to say with the phytosanitary requirements.
The importer presents the pedimento, the phytosanitary certificate of importation and the documentation mentioned in article 36 to the customs authorities. Taxes and duties are paid. The customs authorities decide whether or not they require inspection of the goods. If no inspection is required or after inspection, as the case may be, the product is cleared by customs, who signify this by stamping the pedimento.
Article 60 of the Federal Law of Agricultural Health provides that, where, as here, the phytosanitary requirements provide that the import is to remain in quarantine until processed, the importer is obliged to keep it in a place that he designates, or if the importer does not designate a place, where the authorities designate. Until released by Sagar, the import may not be moved or sold, but Sagar might authorise its re-export (article 27 of the Law) or order that it be re-exported or destroyed if it did not comply with the applicable phytosanitary provisions (article 30).
Accordingly in this case the authorities issued to Dipasa a certificate of quarantine custody on 10 June 1998, after samples of the seeds had been taken for analysis. A certificate for the release of the goods from custody was eventually issued on 16 November 1998, and thereafter there were no sanitary restraints upon the sale and movement of the sesame seeds.
WAREHOUSING IN MEXICO
Until the 1990's warehousing in Mexico was largely under the control of the government, the warehouses being owned by a state body called Andsa. Andsa worked closely with another state owned company, Conasupo, which dealt in agricultural produce, were the purchaser of last resort for Mexican farmers, set minimum prices and controlled imports. In the 1990's Andsa were privatised, and for this purpose their business was split into three separate entities covering different geographical areas of the country. The business in the central Western area was transferred to a new company called Almacenadora Centro Occidente S.A. Organizacion Auxiliar De Credito ("Acosa"). Acosa started operating as a state owned enterprise in the middle of 1996, and the government completed the transfer of business in July 1998. The commercial manager of Acosa is Mr Jose Mosqueda. He had worked for Andsa since 1971, left Andsa in 1993 and returned to join Acosa in October 1996.
Warehousing companies such as Acosa are classified in Mexico as auxiliary financial institutions, and are licensed by the Mexican Banking Commission and by the Ministry of the Treasury. They are closely regulated and controlled. They are authorised to issue certificados de deposito (or certificates of deposit, "cd's"), which are warehouse receipts, and which may be negotiable or non-negotiable.
Licensed warehouses can issue cd's in two different circumstances. The first is where goods are stored in a warehouse owned or leased by the warehouse company, whose own staff man the warehouse. Alternatively, a customer may request a licensed warehouse to be responsible for the storage of the goods in premises belonging to or leased by him The warehouse assumes this responsibility under a procedure...
To continue reading
Request your trial
-
Statoil ASA v Louis Dreyfus Energy Services L P
...proposition Miss Hopkins relies particularly on statements made by Andrew Smith J in Huyton SA v Distribuidora Internacional De Productos Agricolas SA de CV [2003] 2 Lloyd's Rep 780 at paragraph 455. One of the grounds for holding that the sale contract concerned should not be binding was t......
- Huyton SA v Distribuidora Internacional de Productos Agricolas SA de CV
-
Chwee Kin Keong and Others v Digilandmall.com Pte Ltd
... ... [2001] 3 SLR (R) 184; [2001] 4 SLR 407 (refd) Huyton SA v Distribuidora Internacional de Productos Agricolas SA ... ...
-
Odyssey Cinemas Ltd and Village Theatres Three Ltd and Sheridan Millenium Ltd
...say that not only is the judgment quoted in the text books but it has been followed in a number of cases including Huiton SA v DIDEPA SA [2002] EWHC 2088 and UCB Corporate Services Limited v Thomason [2004] EWHC 1164; [2004] 2 All ER (Comm.) 774; ChD. The views expressed are not technically......